F-35 Review: Bombardier’s Warning and the Economic Fallout
The Canadian government’s decision to review its F-35 purchase contract has sparked concerns from Bombardier Inc. and industry leaders. Prime Minister Mark Carney ordered the review of the $19 billion agreement for 88 fighter jets, a deal finalized in 2023 with U.S. defense giant Lockheed Martin. The move comes amid increasing trade tensions with the United States.
Bombardier’s Concerns Over Contract Review
Bombardier CEO Eric Martel has warned that canceling the F-35 purchase could have unintended consequences. The company has invested heavily in its defense unit, supplying surveillance and communication aircraft to the U.S. government. Martel questioned whether the U.S. would retaliate by reconsidering existing contracts with Bombardier.
More than 60% of Bombardier’s revenue comes from the U.S. market. The company also depends on a complex supply chain that includes over 2,800 American suppliers across 47 states. U.S.-made components account for a significant share of its production costs, making it highly vulnerable to tariffs and trade restrictions.
Economic and Trade Implications
The review follows U.S. President Donald Trump’s recent imposition of 25% tariffs on Canadian goods outside the Canada-U.S.-Mexico Agreement (CUSMA), including aluminum and steel. These tariffs could further strain Canada’s economy, which relies on exports to the U.S. for two-thirds of its aerospace industry revenue.
Bombardier’s stock has dropped 18% since Trump’s reelection but remains up 50% year-over-year. The company has already adjusted its financial outlook due to tariff-related uncertainties. Martel acknowledged Canada’s reliance on U.S. military support, stating that the country has “been hiding behind our big brother for a while.”
Political and Defense Policy Shifts
NDP Leader Jagmeet Singh has proposed canceling the F-35 contract entirely and seeking a Canadian-built alternative. This plan aims to create domestic jobs and reduce dependence on the U.S. defense industry. However, procurement experts warn that such a shift would involve high costs, legal penalties, and significant delays.
Carleton University professor Philippe Lagassé noted that Canada cannot simply adopt Sweden’s Saab Gripen fighter jet proposal, which had previously lost in the bidding process. A new procurement program would be necessary, leading to potential delays in modernizing Canada’s aging CF-18 fleet.
Security and Strategic Considerations
Critics argue that relying on the U.S. for fighter jets could pose security risks. The NDP claims that the F-35’s software and hardware updates remain under U.S. control, raising concerns over operational independence. However, Lockheed Martin has denied allegations of a “kill switch” that could disable the aircraft.
Former Canadian Chief of the Defense Staff Tom Lawson acknowledged the risk of software restrictions but emphasized that such measures would only arise in extreme geopolitical conflicts. He stated that Canada and the U.S. share deeply integrated military operations, making a complete break unlikely.
What’s Next for Canada’s Defense Strategy?
While the F-35 contract remains under review, Canada must balance economic, political, and security interests. The government faces pressure to justify its decision, whether it moves forward with Lockheed Martin or seeks alternatives. Any cancellation would likely trigger penalties and complicate defense readiness. As trade tensions with the U.S. persist, Canada’s aerospace sector faces growing uncertainty.
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